September 20, 2003
Club Med Deal Further Consolidates Tourism Industry
Kerzner International, which owns the fabulously successful Atlantis resort on Paradise Island, has bought the Paradise Island Club Med in a $40 deal described by company president Butch Kerzner as a "great investment opportunity" for the company.
Mr Kerzner said the purchase would represent a "significant first step" towards a potential fourth phase of development around the Atlantis resort.
Club Med, which includes a 306 room hotel, occupies a cherry position on the south side of Paradise Island, and also includes a superb swimming beach on the north side. The 20 acre site also borders the eastern side of the proposed 1,200 room hotel which is part of the $600 million dollar Atlantis Phase III development.
As part of the acquisition agreement, Club Med's employees will be given the opportunity to transfer to Atlantis once the company takes possession of the assets which is expected to occur towards the end of 2004. Club Med will continue to operate the property until that time.
The transaction is subject to closing conditions, including relevant government approvals.
There are reports that Atlantis is planning a "jungle theme park" for the property eventually. But intially, starting next year, the existing hotel will be used to house construction workers who will be building the Phase III development. This effectively removes 306 rooms from the Bahamas hotel room inventory for over a year's time.
For Kerzner International the deal is a "great investment opportunity" and it shows Kerzner's continued faith in the Bahamas. But it is also a blow to the long term prospects for the embattled Bahamian economy. The nation is already too dependent on tourism and this deal only further consolidates the tourism industry into the hands of one operator, a situation that is unhealthy in any business environment.
It also highlights to the international investment community that The Bahamas has problems keeping or attracting new investors and indeed is losing investments, including banks and hotels at an alarming rate.
Finally, it intensifies the pressure on government to address one of Kerzner's biggest concerns - the state of the Nassau International Airport, which as a gateway to The Bahamas is considered the worst airport in the region for a major tourist destination.
Posted by admin at September 20, 2003 03:48 PM